Monday, November 13, 2006

Watched Pot

As many people have pointed out in the comments section, it's been a very long time since we've had any kind of sustained downturn. And at this point, "sustained" means more than one trading session! The market is firmly up the 12,000 mark and seems to have its hands perched haughtily on its hips, daring anyone to sell.

It's easy to forget just how complacent and calm this market is. Just look at the NASDAQ recently compared to the wild days of 1997-2002. The market exploded higher over a three year period (and unwound the entire gain just as quickly). Yet over the most recent three years, we've been calmly and carefully moving higher at a deliberate (and annoying) pace.


The Russell 2000, which I'm a bit obsessed with, is in a no man's land at this point. If it breaks below the rectangle I've drawn, odds are very strong that we've seen the top put in. If it breaks above it, we could be in for more of the same bullish behavior. The calendar is not working in our favor. November, December, January are not known as bearish months. But I'm shurring off seasonality at this point, given how useless it was in September and October.


The $SPX, shown below on a minute bar basis, has lost its steam. It was on a solid tear (see the up arrow) for weeks on end. Recently, although it hasn't plunged by any means, it's definitely a bit pooped. Tomorrow morning's retail report and CPI figures (both of which come out an hour before the opening bell) will almost certainly provide some short-term direction.


The gold and silver index, which I am short, fell nicely at the opening bell this morning, but it recovered for most of the day. I've got a stop in here at 142.60.


I'll probably have more to say tomorrow, after the latest economic figures come out.

5 comments:

zstock7.com said...

Here's an idea for a short.
NYX @ $96/98,
I think it has finally run out of steam.

Here's some double tops,coming...
not enough forward eps to break through....

OS @ 57/58
AL @ 47/48
CRDN @ 54/55
DE @ 89/90
ESRX hit it's 20 day...

and...
Tim
I think you have the hardest job in the world.....with the current maket behavior...
It's very important to know when a stock is running out of steam ...
I read that one guy bashing you because you don't do calls....
that guy's the ignorant guy. He doesn't understand this site...

On the way up...you make some money, and on the way down, you make some more money, that's how it works....

The goal is to extract the maximum amount of profit from each trade...
z-stock.....

downosedive said...

OK trader.! Just thought its interesting to look at the same 'object', but see something different to others

Anonymous said...

Now is not the time for shorts. Dow just past through 12200. So much for resistance eh PB? Will the market correct one day? Of course it will, and once the primary trendline and the last 2 significant lows are taken out (confirmation of lower highs and lower lows) then Ill be aggressively short. But in a market of higher highs and higher lows you have no choice but to go 80% long (There will always be stocks breaking down/up no matter the market direction). Technical Analysis 101: The market is always right.

Dont get me wrong I love this site to death and once my bear criterias are met Ill be scouring this blog for some tasty shorts!

Andrew Wright said...

100 points in 20 minutes...thats enough... I've had it. I'm going to cash..... this market has gone mad.

MANIPULATED... Unless there is a reason why the market ran up 100 points in 20 minutes and volume increased thats exactly what it is.....

1 down day in a week and a half.... stocks that are so extended that you

Call it capitulation I call it PATHETIC.

downosedive said...

andrew755 and pb - guys Im suffering with you - I didnt think I could loose going short but as at this crazy crazy rally, im now just lost for words. I guess global warming has finally killed every single bear...........and yes andrew755, a 100 points up in 20mins, but why? why? why?why?